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The Outlook for 2025

The Outlook for 2025

Last updated on: January 2, 2025 at 9:01 am by Gene Veith

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The Outlook for 2025 2025-01-02T09:01:34-05:00 Gene Veith

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We’ve made our predictions for the new year. Today I’d like us to think about what we know is actually in store for us in 2025, though we don’t know exactly how some of these issues will play out. I also want to look at some predictions from experts and what the expectations are from the general public, both in America and globally.

What to Watch For

Trump’s Tariffs. Will President Trump in his second administration really apply the 20% and higher tariffs that he has been talking about? Or will he use that as a threat to get more favorable treatment for American products in world markets? If he does apply them, what will that do? Start up major inflation again, plus a job-killing retraction of American industry because other countries will retaliate with their own tariffs on our products? Or will the cut-off of imports mean an upsurge in American industry as it fills the void of imported products with those that are American-made? We’ll just have to see what happens.

Ukraine & Russia. Trump says that he will insist that Europe do more for Ukraine, increasing their defense spending more than the 2% that NATO requires but is not getting. If that takes, the Ukraine will get more help than it is getting already. The new Vice President J. D. Vance has said that he doesn’t care what happens to Ukraine, reflecting a desire many Republicans to just stop sending so many of our weapons into that conflict. Might Trump’s threats to cut off the Ukraine lead to a negotiated ceasefire that would stop the war? Again, we’ll just have to see.

Israel & Gaza. Israel has made peace with Hezbollah and Iran by defeating them. The Israelis have also conquered Gaza, though Hamas continues to exist in a much degraded form. When will Israel just declare victory and go home? What role might the new Trump administration play in that?

China. What will China do? It has been building up its military and its technology in a threatening way. And yet it is facing major economic problems. And it is doubtless looking at Russia, realizing that a mighty military force can be decimated by a seemingly weaker power, given the capabilities of modern military technology.

DOGE. Will Elon Musk and Vivek Ramaswamy really be able to cut trillions out of federal spending, eliminate unneeded agencies, and thus drastically shrink the administrative state? If so, that would be an achievement for the ages. Or will the entrenched political interests be successful in their resistance?

Pentagon. Can the American military be reformed–its leadership strengthened, its recruitment problems solved, its technology updated, and its moral improved–so that it becomes a formidable force once again that can deter our potential enemies and overwhelmingly defeat any enemy that decides to take us on?

Immigration. President Trump has vowed to deport immigrants who are here illegally. That would be a huge task. His administration is planning to start with the thousands whom a court has already served with a deportation notice, mostly because they have been convicted of committing crimes. It’s a scandal that they are still here. Expect huge outcries about the deportation process. Will Trump be able to pull this off? And if he does, what will the loss of millions of consumers and workers do to the economy? The construction and agricultural industries are already sounding alarms. Will American workers fill the void? We’ll have to see what happens.

Other Predictions

Various experts are making their predictions. The investment banking company Saxo enlisted some to make forecasts to help their clients [my comments in brackets]:

Trump 2.0 blows up the US dollar

As the new Trump administration turns the global financial system on its head with huge tariffs, the world scrambles to find alternatives to the dollar. [Me: There will still be no alternatives to the dollar. A trade war might end in America’s favor. Or it might not.]

China unleashes CNY 50 trillion stimulus to reflate its economy

Having created history’s most epic debt bubble, China boldly bets that fiscal stimulus to the tune of trillions of CNY is the only answer. [Me: If China does that, its economy will become even weaker.]

Electrification boom ends OPEC

As electric vehicles become more affordable, could oil-rich OPEC become irrelevant in 2025 and find itself on the ash heap of history? [Me: I highly doubt it! We’ll still be using oil, including to generate electricity, to a long time to come. Why? See the next prediction.]

US imposes AI data centre tax as power prices run wild

With tech giants sucking up power supplies for their new AI data centres, utility bills skyrocket and an outraged public demands action. [Not just AI but EVs and cryptocurrencies will suck up power supplies. When utility bills skyrocket, the outraged public will turn to cheap oil for their energy needs.]

Expectations

But what are people expecting in 2025?

Americans

According to a survey by You.Gov, 18% of Americans think 2025 will be “a great year for the country”; 21% think it will be good; 16% think it will be OK; 17% think it will be bad; 18% think it will be terrible. Among Republicans, 69% believe 2025 will be a great or a good year; among Independents, 29% believe that; among Democrats, 19% have that level of optimism.

And yet, Americans are much more optimistic about their own personal prospects. Among Americans as a whole, nearly half (49%) believe they themselves will have a great (21%) or good (27%) year;

Breaking it down politically, 64% of Republicans expect they will have a good or great year; 42% of Democrats think that; as do 40% of Independents.

Globally

The Danish international marketing company Ipsos surveyed people in 33 countries. Here is a summary of its findings. (Go to the site for details.)

Seven in ten (71%) say they are optimistic 2025 will be better than this year, below the level of positivity seen before the pandemic.
Europeans [are] pessimistic the global economy will improve. While on a global level people are most positive the economy will stronger than in recent years, in Europe a number of countries are less positive in their outlook than last year.
People expect greater regulation of tech industry. Back in 2021, when we last asked this question, 38% expected their government to introduce strict rules for large tech companies, in 2024 this has risen to 47%.
Fewer think stronger laws to fight climate change will be introduced.The proportion who think their government will introduce stronger targets to reduce carbon emissions is down 3pp [percentage points] compared to last year (now 52%).

Illustration: “Great Expectations,” Advent Sermon Series created by Hope Church North Park [in San Diego] via Flickr, CC BY-NC 2.0

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